32 Share-based compensation continued
Ahold
Annual Report 2010
Group at a glance
Performance
Governance
Financials
Notes to the consolidated financial statements continued
Valuation model and input variables
The weighted average fair value of the conditional shares granted in 2010, for all eligible participants including Corporate Executive Board
members, amounted to €9.42 and €8.37 per share for the three-year and five-year components, respectively (2009: €8.07 and €7.84,
respectively). The fair value of the three-year component is based on the share price on the grant date, reduced by the present value of
dividends expected to be paid during the vesting period. The fair value of the five-year component is determined using a Monte Carlo
simulation model. The most important assumptions used in the valuations of the three- and five-year components were as follows
(expressed as weighted averages):
Percent 2010 2009
Risk-free interest rate
1.9
2.1
Volatility
29.1
34.1
Assumed dividend yield
3.0
2.7
Expected volatility has been determined based on historical volatilities.
Share option plans
In 2005, Ahold had one global share option plan with a uniform set of rules and conditions for all participants, except members of the
Corporate Executive Board, to whom a separate plan applied. The term of the 2005 share options for all participants except Corporate
Executive Board members is eight years and the exercise of these options is conditional upon continued employment during a three-year
vesting period. Upon termination of employment, share options that have vested can be exercised during the four weeks following
termination and are forfeited thereafter. The share option grant made in 2005 to members of the Corporate Executive Board had a five-
and a ten-year term and was subject to a performance criterion at vesting: the average economic value-added improvement versus
targeted improvement over the three financial years prior to vesting. In 2008, the final vesting percentage was set at 96 percent.
Until January 2, 2005, Ahold had three share option plans (the Dutch, U.S., and International Share Option Plans - collectively the
"Plans"). Under these Plans, participants were granted share options with either a five- or ten-year term. In addition, a limited number of
share options were granted in 2006 under the 2005 global share option plan rules with a five- or ten-year term. After the introduction of
GRO, options were discontinued as a remuneration component. All options vested by the end of 2009.
